So far, the standard of living in post-Soviet EU countries is still higher than in China, but that's because of the much better starting point and also because it's just hard to provide wealth for over a billion people in a modern, heavily automated economy. However, even with their gargantuan population size, I see China potentially overtaking Poland or Czech Republic in terms of quality of living in the next 50-100 years.
China also messed up big time by enforcing their 1 child policy, and taking so long to open up and industrialize. They're far behind economically compared to where other countries were with their demographic. Now they're on the verge of the biggest wave of senior citizens reaching retirement the world has ever seen, with crumbling infrastructure and housing, relatively low GDP/capita and no clear path to manufacturing/export of truly high value goods and services. They're screwed.
China really wants to get out of low-value manufacturing, and in some ways they're encouraging pushing that out to south-east asia and africa. But at the same time they don't have the positive image and reputation needed to be a big exporter of high-value goods. Who is going to trust Chinese companies with things like 5G infrastructure and CPS, when they're all basically an extension of the CCP when it comes to security? Who wants to live and work in China now, when you have no real justice for foreign citizens and the CCP can arrest you at a whim? If anything even close to Shenzhen is replicated elsewhere in the world, I think companies and individuals will gladly develop their products elsewhere. Will a giant Chinese company ever gain the reputation of Samsung or Sony? DJI I guess? But that's a bit niche.
Poland is growing healthily last I checked. The proof is in immigration numbers in other European countries. It seems to be reversing. In Norway there's a clear downward trend in immigration from Poland.
https://www.realclearmarkets.com/articles/2018/07/30/ip_thef...!
So Hollywood and the MPAA, who so aggressively pursue what they deem "IP infringement", have more than one skeleton in their closets.
Bear this in mind whenever someone tells you -- as often witnessed here on HN -- "but without copyright there will be no writers" or "art isn't possible without IP laws".
----
[1] https://en.wikipedia.org/wiki/Free_Culture_(book)
[2] https://en.wikipedia.org/wiki/Cinema_of_the_United_States#Ri...
Just recently had a bit of a good laugh about this. I decided to read Caesar's notes on Gallic wars, and downloaded some random .fb2
It turned out to be a preview fragment, which ended with a stern warning that it is illegal to break copyright laws and that this book can be legally purchased via provided link. I'm sure Gaius Julius is very happy with how these guys protect his interests.
Well, without copyright, writers would find it hard to live off their work, but contemporary copyright has outgrown its usefulness and it wasn't writers who pushed for extensions.
Let us get back to the original 14+14 model, but how, against a determined resistance of entrenched interests?
Let's say this research costs 1 million dollars, and the company bankrolls this via a loan. They build it and are successful, and begin paying it off.
Their competitor copies their idea, and exploits the fact that they have more capital and less debt to buy up more of the market, and end up the winner.
So, under a zero protection scheme it is optimal to wait until your competitor invests in research, and then just steal it. Which is what happens on a geopolitical level where there is no feasible enforcement possible.
Is it such a bad thing? The United States did it in order to industrialize and I would say that's a good thing.
The underlying issue with Pareto optimal scenarios like this is that we end up trapped in a local minima.
I think in a particular case it's important to look at the context. For this, it likely depends on the scale, so in small town Georgiaville it would prevent innovation, but across the world scope its better* for ideas to be free.
*given most mainstream progressive utility functions and non-zero-sum philosophies
Some inventions are pretty expensive, like mRNA vaccines. If there is no way to profit from them, no one will spend crazy money on the research.
(Notably, mRNA was originally researched by the academic sector, but it did not recognize the importance of the topic and Katalin Karikó had to move to the private sector to finish her work.)
ASML's machines aren't something you can just copy by buying one of them. (You'd do better by hiring ex-ASML engineers to teach you how to do it.) And ASML would've sold their EUV equipment (just as they continue to sell previous-generation machines) if their export license had been extended by the Dutch government, but the US applied pressure to make sure that didn't happen.
You say China took too long to open up and industrialize. Well, they are open to buy from ASML and industrialize with their help, but others are closing that door...
I think in 5G, some top level planners in the West have realized the error of their ways, and are investing heavily in basic research. I think it is too late.
Wait until Berkeley Stanford and MIT get better network security! [0][1][2]
[0] https://www.nytimes.com/2019/12/31/us/chinese-scientist-canc...
[1] https://www.latimes.com/california/story/2020-06-11/chinese-...
[2] https://www.cbc.ca/news/canada/manitoba/chinese-researcher-e...
To cite them here is firstly to lie, as they aren't relevant, but secondly to show some pretty xenophobic tendencies, equating any news story connected to anyone Chinese as being proof of some other anti-Chinese theory.
Pretty disgusting.
[0] https://blogs.cisco.com/news/huawei-and-ciscos-source-code-c...
[1] https://www.bloomberg.com/news/features/2020-07-01/did-china...
[2] https://globalnews.ca/news/7275588/inside-the-chinese-milita...
[3] https://www.justice.gov/opa/pr/former-raytheon-engineer-sent...
[4] https://www.nydailynews.com/news/national/snowden-chinese-ha...
[5] https://www.theverge.com/2019/7/10/20689468/tesla-autopilot-...
[6] https://www.thedetroitbureau.com/2019/03/tesla-sues-former-e...
https://www.nbcnews.com/think/opinion/cheap-drones-china-tur...
> You say China took too long to open up and industrialize. Well, they are open to buy from ASML and industrialize with their help, but others are closing that door...
There's also the elephant in the room: China is controlled by the Communist party, which holds values that are antithetical to those of many of its trading partners (https://www.nytimes.com/2013/08/20/world/asia/chinas-new-lea...). Neither Taiwan nor South Korea have that kind of incompatibility. It was kind of naive and arrogant for Western trade policy to focus on stuff like IP theft and market access while ignoring that elephant.
You seem a bit misinformed. ASML CEO has repeatedly showed extreme desire to sell in china (it already comprises the fastest growing DUV market)[1]. It's the american pressure, indirectly or directly exerted which is causing issues. If it were upto ASML SMIC would already be establishing it's EUV fabs.
[1] https://www.caixinglobal.com/2020-10-16/dutch-tech-giant-asm...
They're going to try to compete on price and quality. If customers think that the Xiaomi phone is good and cheap, the governments will have a hard time banning it. Customers don't really care about turning over huge amounts of information to Tiktok as well as to Facebook. That puts the western governments in a bind, to either ban wholesale or piecemeal, and it looks bad for them either way.
That's not a guaranteed win for China. It's hard to compete on both price and quality, and they're going to have to work hard to win a reputation for the latter. It's possible: both Japan and South Korea have done it. But they did so with a friendly US, not a hostile one.
They have the advantage of an enormous internal market, but it's not a wealthy one. They're going to look to Africa, which is also not wealthy, but there is money there, with less focus on privacy and more on price. Perhaps India and Latin America as well.
Because China can waggle a huge target market to tempt people into repeating well documented mistakes
Furthermore, Hong Kong has some international appeal and most people think of it as a nation separate from China. In reality, companies from China incorporate in HK to escape the aurora of being a Chinese compnay
I would expect this to continue. In fact, there are probably a few brands that are Chinese that you don’t realize are Chinese.
That's because of geopolitics: These countries are small enough that they cannot be a threat to the US. In fact they are dependent on the US.
China, on the other hand, is a strategic adversary irrespective of their IP laws (and enforcement of those laws) or even of their political regime.
IP is artificial construct supported and ultimately enforced by governments when it suits their purpose. For developing countries this IP just locks them forever into servitude as they can not afford to pay for IP. Never mind that. Even if they invent something themselves they'd still be breaking some patent. Personally I completely support a position where until country reaches certain GDP per capita they should be free from any IPO enforcements.
By the way the largest IP holder on this planet is also the largest thief of IP. This is how they've started.
Weren’t South Korea, Taiwan, and even Japan once known for their rampant IP theft?
Yes they stole even IBM Mainframe OS's repeatedly....and sold it.
That said, it is possible that China will reverse this self-made problem by developing and mandating use of artificial wombs or something similar. Authoritarian societies do not have many ethical scruples when it comes to problem solving.
With that said, my next phone will be an iPhone. I am trying to de-china whenever I can when it comes to buying stuff.
I have bad news for you, friend.
Isn't Apple extremely well known for it's production lines being in China?
Other than my car and some furniture, pretty much everything I've bought that cost more than $100 in the past 10-20 years has been made in China.
> Will a giant Chinese company ever gain the reputation of Samsung or Sony?
Perhaps not, but they'll likely continue to manufacture most of the products sold by the Sonys and Apples of the world.
From that point on they had a pretty clever long view policy but it would have been surprising if they hadn't. They spent the previous century getting fucked by foreign invaders, if they hadn't learned how to resist it by the 1970's then Chinese culture as we know it would have been doomed to collapse by the 90's.
And truth be told they almost did in 1989. If the CCP was a little less organized, if the military was a little less loyal and if the protesters had their shit together a bit more it could have turned into a full popular revolution.
It would have plunged China into a civil war again and there would be millions dead. China would be a worse position now by every metric.
Pretty much none of the tactics would have worked for a small country that China played successfully. If you are small you can choose to be independent and protectionist - and remain very poor, or join the party, but be pushed into the corner, hoping that with time the playing field will level out somewhat.
A WTO member can either comply with their treaty obligations (e.g. reducing barriers to trade) or have other members apply their own remedies (e.g. punitive tariffs.)
If the effect of compliance is worse than the punishment (e.g. underdeveloped industry eliminated by foreign competitors vs. continuing to operate despite high tariffs) they'll not comply.
If the punishment is worse (e.g. industry is basically competitive, but tariffs would make products hard to sell in foreign countries) they'll choose compliance.
At the bilateral level, there's not much difference to the pre-WTO situation, which might make you wonder whether it's all pointless. The advantage of the WTO is that it provides a shared target for compliance: if a country follows WTO rules, pretty much every other member will be happy with that. Which is a bigger incentive than having to please every trading partner individually.
Not true. I hope you are joking. Most countries that joined the EU in the 2000s and 2010s become pretty westernized within 5 years of joining. Have you ever spent significant time in these countries, pre-EU or post-EU? Also, the countries that benefit the most from being EU members are the new members.
> So far, the standard of living in post-Soviet EU countries is still higher than in China, but that's because of the much better starting point and also because it's just hard to provide wealth for over a billion people in a modern, heavily automated economy.
The standard of living is pretty high in a lot of those countries, and not all of them are post-Soviet. Look at Malta or the ex-Yugoslav countries (Slovenia, Croatia) for example. I do not understand why westerners (particularly Americans) like to talk trash about the EU. I hope the Americans doing this realize where they are going, as in the wrong way, or on the wrong trend line. Of course America can wake up from being on some trend line, but to win the battles they are up against, profound societal changes will need to occur.
U.S. life expectancy will soon be on par with Mexico’s and the Czech Republic’s: https://www.washingtonpost.com/news/to-your-health/wp/2017/0...
Also, according to that article, American women's life expectancy is soon to mirror Croatia. You know, that war-torn, ex-Yugoslav country that had a nasty war in the 90s and displaced a lot of people. Americans should be embarrassed.
What isn't fine is the worldwide trend toward morbid obesity and metabolic disease. Americans, as usual, are the trend setters, but we are following them. That is what reduces life expectancy and especially life quality in nations that can afford to gorge on 100 pounds of sugar per person and year.
I am a dual US| EU (Croatian) citizen, who is culturally American. I live in Croatia. So, I hope you understand where I am coming from, even though I was wrong.
I also have type 1 diabetes (autoimmune and insulin dependent) which is a “metabolic disease”. It is more appropriate to say “type 2 diabetes” or “diabetes type 2” or “insulin-resistance”, rather than a metabolic disease.
The issue with America is we have a lot of unnecessary death. It is not just obesity and type 2 diabetes, although that is a huge part of it. Our healthcare system is designed to create as much profit as possible, without having to improve the health of the people using it. We have no adequate public health infrastructure because of this huge profit seeking and we suffer because of a lack of regulation. This all causes unnecessary death.
To my mind the EU was our salvation not so much because of its economic nature, but because of its political one. The free market was the price we had to pay in order to be able to travel, work, study abroad, earn real wages that we could use to invest back into our own country etc. The EU also insured a decent degree of geo-political, strategic stability. Without the EU we may have ended up like our neighbors to the North/East.
Adjusting to a new trade regiment will always be painful in the short term.
But many factories have moved labor intensive parts of production to eastern europe. Which wouldn't have been possible without the EU.
In Romania it's actually quite hard to buy products and services that are not provided by some foreign company. Most banks, all big shopping chains (as GP noted), lots of the food and clothes, agri-business, almost all the telcoms are foreign. As a matter of fact, even though we have our own currency, a lot of products are pretty much directly priced in euros: cars, home appliances, electronics, apartments, land, rents, utility bills. All of these go up when the euro goes up (they don't go down when the euro goes down - and the euro never goes down).
Sadly, Romania’s competitiveness in building its own businesses in Europe is weakened by being left out of Schengen. Considering that Mark Rutte’s party just won reelection in the Dutch elections, sadly nothing is likely to change on that front for years – he is the biggest force vetoing Romanian accession to Schengen.
We should just start vetoing some of those important treaties or other big agreements. We need to start pressuring the other EU members into pressuring the Netherlands for us.
A person even closer to me used to work for OMV immediately after they had purchased Petrom (our former State-run oil company). The stories I could hear back then could fill many pages, I still remember seeing the papers with hundreds of people's names on them, people who were supposed to be laid off the following days. And that was just from one company division. To say nothing of the fact that the Austrians had no oil drilling operations, no oil drilling specialists, nothing of the sorts, while Petrom had been in the oil drilling business for decades. Or how OMV had (I think it still has) as its major shareholder the Austrian State, so in fact we managed to sell our oil state company to basically another state.
It doesn't seem Romania is drilling much these days, more like refining imported crude oil before exporting the products. Judging from what was left of a different communist regime the last 30 years haven't been easy but most people seem to be much, much better off now than before the fall of the iron curtain probably also compared to the general QoL development in the world, I haven't looked up any statistics but it definitely seems like it. The quality standards now are much higher in every respect, the work in a factory is much safer for the workers. You are usually looking at many years of retirement even when you generally retire later where I hear stories about people from factories dying quite early probably because of the working conditions, many small injuries over the lifetime, fumes, dirt, smoking everywhere and all the time etc. If you get injured at work in Germany and haven't done anything against the protocols, it is a big problem for the company - you will be compensated usually very well for your trouble. Companies try to avoid injuries as well as they can in my experience on seeing the shop floors of a steel foundry, where safety really matters, else you are likely to get hurt fatally.
That said, no corporation is always doing the smart thing from the business or management perspective. There is usually internal politics, management strategies and more involved. There are also more and less competent people at every position. Maybe OMV should have kept some of the specialists and maybe educate them about the modern technology and methods. Generally the previous regimes were not very efficient with personnel and other resources so it is really hard to say what OMV should have really done.
The best way seems to start with low level work and move up the chain.
It'll be interesting to see. Making good chocolate certainly isn't easy. Nor is compliance with food quality standards..
But if they control enough of the chocolate production, I guess foreign manufacturers may choose to setup a processing factory in Ghana.
Of course, it's not without risk. Foreign manufacturers could perhaps invest into farming equipment to make neighboring Ivory Coast more productive at farming cocoa..
But doing this certainly creates uncertainty and instability, which is rarely good.
If you are buying an $9 chocolate bar, in addition to quality, consumers are also looking to support fair business models. So improving the labor conditions, something many European companies seem to show little interest in, is as much a part of finding better partners as increasing quality. And more and more, these issues are just as important as quantity.
That's already known factor though. The reason of the free movement of labour to make up for capital movements like these.
It depends on your perspective really. When I lived in Oregon, there were Fred Meyers all over the place, but they're all owned by Kroger (HQ in Ohio) now. Are they 'foreign' because they're from another state inside the USA?
AFAIK, Kroger keeps the local brands, so IDK why none of the local Romanian brands were kept. If it's anything like China or USSR, probably not a lot of faith in the local brands I guess?
But this isn't a great analogy because the U.S. federal government keeps interstate trade much more homogeneous than the EU.
That's part of it, but there's actually also a set of interstate compacts (that still have to be "allowed" by Congress constitutionally) and also Uniform Codes (which don't). Particularly the uniform commercial code https://en.wikipedia.org/wiki/Uniform_Commercial_Code
Basically, a think tank from the 50's decided to convince all the states to pass laws which just all happened to look alike because they copied from the same source. No interstate agreement required, they just all did it, no congressional thumbs up required. I... don't think the EU is quite on that level of unity yet =)
But were the local owners forced to sell? And is there an actual issue with them selling to foreign companies?
In practice, many large companies are owned by investors from all over the world looking for diversification.
If the interesting work all stays in the home country, how do you call that?
We like to kid ourselves that multinational companies are truly multinational, companies of the world. What's the percentage of non-American top managers, for example, working for American based multinationals? It's probably in the low 1-digit percentages.
There is a definite advantage to bejng an early investor. For these companies the risk is comparatively small and the rewards they reap are huge and on very long time horizons.
It's not super clear cut that it's all nationalist BS.
As far as returning the earnings to workers and local economy via taxes - yes there are expenses, you can't take 100% of income as profits, but there is a lot of leeway to direct the funds pretty much wherever the company chooses. Corporate headquarters in tax friendly countries are popular for a reason.
When the company buys in Romania and lays of the local marketing, sales departments, etc to make things more efficient, uniform and streamlined that doesn't help the local economy. That makes things more efficient tho but as a Romanian you're left holding the bag.
Now everything is foreign owned and the streamlining and competition has played out in such a fashion that there's potentially less competition and consequently less benefits off competition. (see all the modern industries that have turned into duopolies, monopsonies or the like that can easily keep new competition from coming in but also don't compete enough to drive consumer prices down.
When foreign owners extract profits to recover their investment or pay whomever, wealth is in fact leaving the country - because they still own the capital (stores) yet get money back.
It's not clear cut based on this. They could have invested beyond price, brought knowledge, improved efficiency ... It's also possible they are in effect extracting wealth colonialist style, which is something to beware of - at scale it can have severe consequences for local economies.
If push comes to shove, they will for sure prioritize French/German/Belgian interests.
Can't really blame them but strategically it's not a position you want to be in, looking at it from the other side.
In more general sense, all global companies have some originating country and most of them keep the HQ and most of the high-paying jobs there. They expand to other countries mostly as a cost-saving measure and they have zero loyalty to them, while they have a lot of loyalty to the mothership.
No, it makes perfect sense when you factor in that FIAT/FCA/Stellantis was and is the receiver of massive subsidies, in various guises, from the Italian state. Losing those would be more harmful to the business than losing any foreign factory (with the exception of US ones, which were also beneficiaries of massive state support). FCA stopped being a "national champion" ages ago, they are just a hardened global business now; they just know which side their bread is buttered.
> They expand to other countries mostly as a cost-saving measure and they have zero loyalty to them
Believe me, they have zero loyalty to "the motherland" too. Many of them have long relocated their HQ too, for fiscal reasons. FCA/Stellantis, for example, is now based in Amsterdam. The chance that they'll ever expand again their manufacturing bases in Italy or France is minimal.
Honestly, the issue is that national champions don't exist anymore. Greed-is-good is all that matters.
https://www.manager-magazin.de/unternehmen/handel/aldi-nord-...
I don’t
Yugoslavia 1) allowed its people to freely work in the West, and many people chose to go to West Germany, and 2) Yugoslavia built up extensive tourist infrastructure in Croatia and Montenegro that drew predominantly German-speaking holidaymakers (and not so many English-speaking ones -- UK holidaymakers went for e.g. Spain or Greece during this era). All this made German seem like the language for communicating with foreigners, though among younger generations it is already giving way to English.
There is quite a body of scholarship on the sociolinguistics of the Austro-Hungarian Empire, if you are curious.
You don't build a bond with some nation and culture over the course of one century it takes more than that. For example like you probably know Ottoman Empire was ruling and controlling south-east Europe for 500 years and impact of that is very much visible and present today.
The German connection is definitely there. There was even a transliterated word used for people working abroad: "gastarbajter," from German Gastarbeiter. And it was used for anyone working abroad, no matter where :-)
Edit: https://en.wiktionary.org/w/index.php?title=Category:Serbo-C... . I can't believe "boja" is borrowed.
Certainly German words in Croatian testify to contacts at some level of the population. Romanian, too, abounds in German words in some domains, for example, but this doesn’t mean the average Romanian would have been able to speak any German. But in Croatia knowledge of German varied greatly from the country’s northwest to its south. Again, the sociolinguistics of the Austro-Hungarian Empire are well-described.
Althought I did see enough Lidl and Aldi around.
US states, despite what Americans tell themselves, are culturally/socially/economically a lot more homogeneous than random countries around the world are to each other.
And US states are all protected by the same federal government. None of them can really be abused by outside forces with little/no repercussion.
They really can't be compared (US states vs countries around the world).
> They really can't be compared
Sure they can. They show that a diverse set of "countries" with no trade barriers results in mutual prosperity. It's one of the great ideas of the United States.
Plenty of nations around the world are bullied. The US and the banana republics (which sounds a lot like arrogant victim blaming from the Americans!), Eastern Europe and Russia/the Soviets, Afghanistan and everyone, etc.
US states don't have that problem. When was the last time Idaho had to defend itself from foreign interference, invasion, trade embargoes, etc?
Regarding US states, and though I absolutely abhor playing devil's advocate on this one, the Northern states did force the Southern ones to give up their economic model at gun point.
Free trade, right? :-)
Your thesis was free trade turns countries into colonies. It clearly doesn't. It's other things that turn countries into colonies.
https://www.euractiv.com/section/trade-society/opinion/eu-fr...
Similarly to how Vietnams economy is hampered if it gets exposed to more mature parts and electronics industries from let's say Germany leaving only it's mature low skill industries sustainable trough low wages I can see the same in the west
I live in a western country and i enjoy relatively free trade with the US but I don't expect my country or surrounding ones to produce a software giant because I expect them to be stomped in the ground by existing duopolies or simply bought out. I don't expect something to join the competition between intel amd anywhere in a free trading world and potentially drive consumer prices down more because they'll perpetuate their copyrights and IP with well timed adjustments till the sun goes dark, etc
It seems to me too early to predict a lot about Eastern Europe. < 20 years is not a long time. 2007 means that the first children born after Romania joined the EU are 8 years away from leaving university.
You could very well be correct, but I'd want to see some countries that tried this a lot longer ago.
Almost all the cases of countries going from underdeveloped/developing to developed did it through various forms of protectionism: Japan, Singapore, Taiwan, South Korea, China, Hong Kong.
I'm trying super hard to think of a country that did it by liberalizing fully. Eastern European countries might be the examples you're looking for, but it's too early to say.
If you think about any sport, or any activity in general, it makes sense. You never expose the hard parts, you only expose what you can easily defend or what can defend itself. Or if you're China, you fake exposing the soft parts and then you catch everyone in your tar pit :-))
Is it a bad thing? I was under impression that these were exactly the kinds of businesses that operate better at larger scale.
I'd be interested in the story, if you have time, but my only comment for everyone else reading this, these are technicalities, regarding the gist of my comment. They only change the timeline, but the main idea is the same.
This should have been obvious since the Opium Wars and the Opening of Japan (see Commodore Matthew Perry).
All developed countries are pro free trade for markets where they are strong and fiercely protectionist where they are not (or they consider those markets strategic priorities).
I'm from Romania. Romania joined the EU in 2007, so we had to liberalize everything. It has generally been good for us (higher wages, economic growth, overall development), but I know all the German, French, Belgian supermarket chains.
Do you know why I know them? Because there are 0 (zero!) local supermarket chains left. They've all been bought by foreign companies.
Similar story for banks, car companies, whatever.
During the 2008 economic crisis Erste, Austrian banking group, repatriated all the local profits (from BCR, former major Romanian bank) to Austria so that the local banks would not be impacted. Similar story for OMV, Austrian oil and gas group (from Petrom, former major Romanian oil and gas company).
It's a mixed bag, really. You need some foreign investment to kickstart things, but if you don't start blocking stuff off, you'll never go over the middle income barrier, at best. At worst you practically become someone else's colony, or in the olden days, you actually were their colony (and what happened in Bengal in 1941 and Ireland in the 1800s comes to mind).